During the height of the driver shortage in 2000, Causley Trucking, a small regional mail hauler based in Saginaw, Mich., lost 16 percent of its drivers to turnover. That might sound like outstanding performance to most trucking companies, but not for Causley Trucking. President Greg Causley says the carrier had virtually no turnover before and was now spending heavily on training and recruiting.
“It was our first year in history that we had a large turnover,” Causley says. Carriers that haul mail seldom experience the kind of turnover rampant in over-the-road hauling because conditions favorable to drivers. The federal government sets pay, and most of the hauls are local or regional. Getting drivers to stay is usually easy, Causley says, because they are generally home every night. All trips are scheduled, and drivers know as much as a year in advance when they’re working.
But lucrative signing bonuses and other incentives offered by over-the-road fleets during the driver shortage drew some of Causley’s truckers away.
When the company hired replacements to fill empty trucks, they weren’t as good as the ones who had left. While most carriers would kill for a turnover rate of 16 percent, the costs to Causley’s 50-truck fleet were more than he wanted to spend. Flush with extra space in his company’s new headquarters, Causley turned to Baker College, a community college based in Flint. Causley offered access to his facility, his trucks and some of his drivers if the college would start a truck-driving school at his company’s headquarters. Causley would get rent – albeit at a discounted rate – and a break on tuition.
Two years later, the school is graduating students. “Although the need for drivers isn’t as critical now as it was when we started this school, we’re better poised to deal with the shortage now,” Causley says. “We’ve been through that cycle once.”
Causley says the school, which took nine months to set up, gives his company a revenue stream and graduates quality drivers he can hire. Two students, for example, recently joined the company from its first graduating class. The school also gives his veteran drivers a chance to evaluate potential hires and a chance to earn extra money training. “It’s enlightening to our drivers to see a new crop of drivers,” he says.
Causley meets with the students frequently. On a Tuesday night in April, the school, which offers a 30-week program to prepare students for the Michigan CDL, asked Causley to be the guest speaker. On that night, Vance Radon, a student recently out of the military, was at the school early making up work. Radon says he’s looking for a career change. “I also want to see some of the United States.”
Radon drives 60 miles to attend classes from his home in Waterford. Most students, however, are from the surrounding county, making for great community relations, Causley says. Before the school was started, there was only one truck driving school in the state certified by the Professional Truck Driver Institute, and it isn’t anywhere near Saginaw.
“The last two classes were all from Saginaw County,” Causley says. “This really meets a local need.”
Because the school is PTDI certified, the graduates are more knowledgeable in the trucking business and go through screening processes that help Causley avoid some of the problems he used to have with applicants. Drivers who haul mail must pass a government background check, among other things, but applicants off the street aren’t always honest on their applications. That often means extra paperwork and expenses for the mail carrier. With the school in the same building, Causley can get to know drivers better and evaluate their potential and character.
Greg Causley points to certificates of his drivers who act as trainers. Causley truckers instruct students at the school.
Turning safety into cash
The partnership with Baker College is part of Causley’s overall business strategy. If the company has an underutilized resource, such as extra space, he will find a use for it. Causley recently partnered with Fleet Compliance Group, which offers safety compliance seminars, training and testing, to offer his staff’s expertise to other trucking companies. He formed Fleet Compliance Group-Eastern Division, which now offers his safety director on a consulting basis to other fleets – even competitors.
“We’ve been doing safety compliance all our life, and we do it very well,” Causley says.
Causley Trucking has been recognized for its safety programs by the Michigan Center for Truck Safety, and its drivers have won truck-driving championships. Because Causley Trucking is small, its safety department has slack time. The Fleet Compliance Group venture leverages that time to produce revenue for the trucking company.
That extra revenue is especially welcome because the mail business is starting to decline, Causley says. Mail volume is falling because more people are using e-mail and business parcels. Bulk mail advertisements have dropped precipitously during the economic slowdown. The Sept. 11 attacks were a boon for some mail carriers initially, as mail moved from planes to trucks, but it was short-lived. More mail may be moving on trucks after the attacks, but there’s less mail volume overall.
In January, for example, the U.S. Postal Service reported that overall mail volumes fell 5.5 percent in the final quarter of 2001 over the same period below the same period last year. That marked the single largest quarterly mail volume decline in recent history. USPS expects to lose $1.5 billion this year and overall mail volume is expected to drop by six billion pieces from last year, a 10 percent decline.
Location: Saginaw, Mich.
Principal: Greg Causley
Equipment: 50 Kenworth T-600 daycabs. Cummins N-14 Engines; Eaton Fuller transmissions.
Freight: U.S. mail, tires
Challenge: Reducing driver turnover and maintaining profitability in a declining and competitive core market.
Solution: Helping to establish an on-site driving school, turning its safety department into a consultancy and diversifying freight and business holdings.
Less mail is only part of the challenge facing haulers like Causley Trucking. Causley says the Postal Service is reducing the price it’s willing to pay for a load of mail. “Profit levels have been greatly reduced,” he says. “We’ve been able to survive because we’ve been able to cut costs in some areas.”
Increased competition also plays a big role. Carriers inexperienced with government contracts will come into a market and underbid trucking companies that have had contracts for years. The upstarts think they will get more contracts to offset any losses on the initial contract.
“It doesn’t work that way,” Causley says. “They think they can buy their way into the business.”
Because postal contracts have to be bid, companies (usually one- or two-truck operations) with existing contracts don’t get preferential treatment, so underbidding only gets a carrier the one contract. Causley knows better than to bid for a job below the profit point. “I know what that contract costs to fulfill,” he says. “Our competitors have to do the same things we do. They use the same trucks, the same fuel and the same vendors. All the drivers have to be paid equally.”
Still, the underbidding is cutting into Causley’s business, which includes contracts that go back as far as 1951. That’s when his father, Harold, acquired the company’s first U.S. mail contract, transporting U.S. mail from the Bay City train depot to Rogers City, Mich.
Harold Causley expanded his operations in 1964 and again in 1971 when his son Greg joined the company as its manager. The company had only 12 trucks then, but Causley Trucking expanded by adding mail contracts and absorbing other mail contract carriers into the business. Now the effort is to keep revenues from shrinking as the mail business declines.
To do that, Causley has not only generated extra income through the driving school and safety outsourcing businesses, but he has also diversified the kinds of loads the company hauls. In addition to mail, the company now hauls used tires, and the carrier is always on the lookout for more business.
In 1995, he bought L.R. Vincent Truck and Service Inc., in Iron Mountain, and George E. Campbell & Sons, Inc., in Detroit. In 2000, he acquired P-D Trucking, Inc, another mail contractor in Gaylord, Mich., and Fedrizzi, Inc. in Iron Mountain. All five companies continue to haul U.S. mail throughout an eight-state area.
The diversity – Causley also bought the assets of an excavating business and a sawmill – and the extra mail contracts have helped keep revenues up even as the mail business becomes less profitable. So far, so good, says Causley. And when he finds that extra business, he won’t have to look far for the drivers who will fill the trucks.